In September 2014, Motley Fool One’s SMA offerings underwent a significant change. It used to be that the SMA’s exactly matched one of their portfolios (Supernova, MDP, Pro, or Everlasting), and they touted the ability of members to follow their favorite service exactly via these accounts. It was the ultimate in auto-pilot investing for those that wanted to invest with the Motley Fool but didn’t want to be bothered with executing all the trades, and worrying about matching allocations. And if you were a believer that a certain Motley Fool portfolio would outperform, you could rest assured that by opening up one of these SMA’s your performance would equal the performance of the portfolio. It was a great solution.
Now however they have changed that approach and the SMA’s no longer exactly match the service they are named after, but instead are “inspired” by those services. This means that they may not actually buy all the same stocks the portfolio buys, or may in fact own stocks that the portfolio never bought. They will likely overlap quite a lot but the important distinction here is that you are not actually able to do the type of auto-pilot investing they originally touted. It will be close, but not exactly the same.
Most importantly, you are basically relying on advisors other than the portfolio managers to pick the stocks they will invest and at one allocation. So if you open a Pro SMA because you are a fan of Jeff Fischer (the lead advisor for Motley Fool Pro), you are not necessarily getting Jeff’s exact recommendations; instead you are relying on the SMA managers, Brian Hinmon and Nate Weisshaar, to make the investments for you, inspired by what Jeff is doing. What’s the big deal, you might ask, surely it will be very close? I would argue that I can run my own portfolio inspired by Jeff Fischer without paying the extra money to join One.
The other big change they made with their SMA offerings is that they now have 3 new portfolio strategy SMA’s: International, US Small/Midcap, and Fixed Income. As the names suggest, they provide exposure to those sectors. It’s an expansion of their offerings and is another step for Motley Fool moving to become a full fledged Wealth Management shop. It’s a logical transition for them, and it will be interesting to see how it evolves.